John O'Mahony (Mayo, Fine Gael) | Oireachtas source

I welcome the opportunity to contribute to the debate on this Bill. The credit union movement and its branches throughout the length and breadth of the country, especially in small towns and villages, have provided a vital financial service during the past half century. Its structure, based on volunteerism and being close to its members and the community, was and is unique and the main reason for its success. The idea was that money was in circulation in the communities each union served. In other words, people saved and invested while drawing down loans at the same time.

This was a wonderful model, evidenced by the vast number of people involved; some 3 million people throughout the country are members of credit unions. They were run in a personal way based on local knowledge and all decisions were made locally. This meant there was less leakage and fewer bad loans were given out as a result of this local knowledge. All of these developments in the credit union movement took place alongside a banking system that initially provided similar services but which then grew out of all proportion and became impersonal. Decisions in the banks were not made locally and money was thrown at people in the good times. There was little or no regulation and now those same banks are downsizing and closing as a result of that mess. Now there is a greater need than ever for the services credit unions provide in their local communities. Admittedly, some of the larger credit unions got involved in similar activities but the majority did not. Everyone involved in the credit union movement and all the contacts I have had recognise that there is a need for reform and change. The Minister for Finance, Deputy Noonan, and the Government have committed €500 million to address problems in the sector as well.

There is recognition everywhere that change is needed. The Irish League of Credit Unions acknowledges the need for change and reform and has stated that the process should be to facilitate healthy, strong and vibrant credit unions to provide existing and new services to their members in a safe, modern and consumer-friendly manner. This is what everyone needs but the question of how to get across that line is important.

Concern has been expressed by many Deputies about the need to keep in mind the uniqueness and the personal nature of the service and that these could be lost if they are put into a straitjacket of regulations that are disproportionate in comparison with the services they offer, and which do not take into consideration the nature of the input and volunteerism. There is a marked contrast between the banks and credit unions. We do not need to impose some of these restrictions on credit unions which might result in their becoming just as impersonal as the banks.

I am a member of a credit union and I have a bank account, but I have not stood in a bank more than three times in the past ten years because they are simply impersonal. We need to preserve the uniqueness of the credit union. I do not have time to go through all the various topics or concerns but these are well known and have been articulated. They include governance issues, Central Bank legislation dating back more than 70 years and the need to preserve some sense of volunteerism in the sector. Some of these provisions should be re-examined but the uniqueness and services offered by the credit union movement should continue to be offered while ensuring they are regulated and run in a very transparent manner. We should not throw out the baby with the bath water or inadvertently bring to the credit unions some of the lesser qualities of the banks apparent at the minute.

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